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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oxford Technology 2 Venture Capital Trust Plc | LSE:OXH | London | Ordinary Share | GB0003105052 | OT2 ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.00 | 7.50 | 14.50 | 11.00 | 11.00 | 11.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | -1.63M | -1.88M | -0.0674 | -1.63 | 3.06M |
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Oxford Technology 2 Venture Capital Trust Plc
Unaudited Half-Yearly Report
For the period
1 March 2018 to 31 August 2018
Financial Headlines
6 Months Ended Year Ended
31 August 2018 28 February
2018
Net Assets at Period GBP1.62m GBP1.69m
End
Net Asset Value per 30.4p 31.7p
Share
Cumulative Dividend 21.0p 21.0p
per Share
Total NAV Return 51.4p 52.7p
per Share
Share Price at Period 36.5p 27.5p
End (Mid-Market)
Earnings per Share (1.3)p 1.0p
------------
Company Number: 3928569
Registered Address: The Magdalen Centre, Oxford Science Park, Oxford OX4
4GA
Statement on behalf of the Board
I am pleased to present the unaudited results for the six month period
ended 31 August 2018.
Results
The Company's net asset value (NAV) per share has decreased from 31.7p
at 28 February 2018 by 1.3p to 30.4p at 31 August 2018, half of which is
due to operating costs and the other half due to a slight net reduction
in the valuations of the portfolio. Shareholders are reminded that the
Company accrued 50% of the amount being held in escrow following the
sale of OCR Robotics last year. We have not yet been made aware of any
potential claims against the warranties and remain hopeful that we may
be able to account for the balance (GBP164k, i.e. 3p per share) this
time next year, although there is also obviously the possibility that
the similar amount already accrued may be at risk.
Portfolio Review
As I indicated in my statement in the 2018 Annual Report, the Company
invested GBP150,000 into Scancell Holdings Plc (Scancell) in April 2018,
as part of a GBP7.5m funding round: OT2 now owns 1,250,000 shares.
Scancell is well known to the Directors and Investment Adviser (and also
to shareholders who have attended our recent AGMs). It is developing a
number of exciting new potential breakthrough cancer treatments, has a
number of active initiatives and continues to make scientific and
regulatory progress. In the last few months, it has established
manufacture of Moditope, extended the Trichor delivery mechanism deal
for SCIB1 and is busy preparing for the clinical trials which were
signed up earlier in the year. Given Scancell is quoted on AIM, this
qualifying investment will also help OT2 manage any future liquidity
needs. Without such flexibility, there is a risk OT2 may have struggled
to meet some of the latest VCT qualifying test requirements, again as
explained in the VCT Market Changes section of the 2018 Annual Report.
The bid price of Scancell at 31 August 2018 was 11.5p, 0.5p lower than
the placing price, leading the Company to record a small unrealised loss
in the period. The Directors are optimistic that this will be reversed
before the Company actually needs to sell any of its holding.
The 8 unlisted companies within the portfolio continue to develop, and
where required and permitted under VCT rules your Company continues to
invest to support that development. ImmBio is in negotiations with
pharma partners regarding PnuBiovax, and during the period an additional
investment of GBP12k was made to enable the first deals to be closed.
After the period end, GBP59k was invested in Orthogem, which now has CE
approval for its putty product and has begun sales and is signing up new
distributors.
Select Technology, a photocopier (or more generally Multi Function
Device, or MFD) software company, remains the largest holding in your
Company's portfolio (nearly a third of the total investment value).
Having suffered a setback with the loss of a master distributorship for
Europe with one product in 2017, which led to the company becoming
loss-making for a period, Select Technology has been making good
progress with IDEA - the International Document Evolution Alliance.
This is a global network of distributors who all understand software,
networks and the document management business, and who can offer a one
stop global distribution network which is attractive to developers.
Sales and profit margins have been increasing and the prospects for the
future are encouraging. The company attended our recent AGM and its
presentation can be found on our website.
Arecor continues to make encouraging technical and commercial progress,
and has secured a GBP6m funding round, led and 80% funded by 3 VCT
groups: Calculus, Downing and Albion. We take this as a strong third
party vote of confidence in the company, its technology and its business
plan. OT2 invested in advance (in the previous financial year) and OT3 &
OT4 have also invested in this round.
Oxis Energy is busy leading a GBP7m Innovate project and has started
construction of a manufacturing plant in Brazil, but unfortunately
raised money recently at a significant reduction to the previous round.
The impact of the preferential rights of certain share classes further
amplifies the effect of this.
Overall, the impact of valuation changes across the portfolio during the
first half of 2018 has been a loss of GBP33k.
The Directors along with the Investment Adviser continue to take an
active interest in the remaining companies within the portfolio, both to
support their management teams to achieve company development, but also
to prepare companies for realisation at the appropriate time. It should
however be noted that approaches do occur at other times, and the
ability of the Directors and Investment Adviser to be able to provide
support when such approaches occur is essential for maximising value.
Liquidity
The Directors are not proposing any dividend at this time, in order to
ensure that the Company retains sufficient cash to ensure it can
continue to operate for the foreseeable future and remain VCT
qualifying. Some portfolio companies will require further financing and,
as always, these will be considered on a case by case basis.
VCT qualifying status
The Board has procedures in place to ensure that the Company continues
to comply with the conditions laid down by HMRC for maintaining approval
as a VCT. As already flagged, the Company took the unusual step in April
2018 to invest in a new AIM holding (Scancell), the prime intention of
which was to be confident of meeting new VCT holding test requirements
once they apply in two years' time.
Change of Auditor
James Cowper Kreston, our auditors for the last 13 years, have decided
to withdraw from auditing Public Interest Entities for the time being
due to the increasing regulatory landscape and associated costs.
Unfortunately, this includes VCTs. The Board would like to thank them
for all their support and constructive feedback during their period in
office. Shareholders will recall that last year, we carried out a tender
for the audit. The Audit Committee was also impressed by one of the
other firms who responded, and on its recommendation, the Board is
therefore pleased to appoint UHY Hacker Young LLP ("UHY") to fill the
casual vacancy that has arisen. UHY will audit the Company's 2019 annual
results, and shareholders will be asked to reappoint them at next year's
AGM for the following year's audit.
Presentation of half-yearly report
In order to reduce the length of this report, we have omitted details of
the Company's objectives and investment strategy, its Advisers and
Registrar and how to buy and sell shares in the Company. These details
are all included in the Annual Reports, which together with previous
half-yearly reports, are available for viewing on the Oxford Technology
website.
Outlook
Your Directors continue to monitor changes to VCT legislation, and their
potential impact on both the VCT and its investee companies. Recent rule
changes to tax efficient investment schemes are not expected to have any
material impact on the current portfolios or on current investors as the
VCT is fully invested. Likewise, whilst the impact of Brexit remains
unclear, your Directors do not expect its eventual outcome to have a
material impact on portfolio valuations.
The Board has previously announced that it was aware that due to recent
realisations, the VCT is becoming sub economic with unavoidable
overheads on a small asset base. We are pleased to have announced our
proposed tie up with Chelverton Asset Management, and we hope
shareholders will support the various resolutions that will be proposed
at the General Meeting on 19 November 2018, to enable the creation of a
new class of shares, and the fundraising that will follow. It will be
the start of another chapter in the VCT's life, whilst allowing time for
value to be crystallised from the existing portfolio and cash
distributed to shareholders when the opportunity arises. We remain of
the view that the portfolio, while concentrated, still holds significant
potential over the medium term although not without risk: this
initiative with Chelverton should ensure the ongoing protection for
shareholders who are still harbouring capital gains that were deferred
at the time of their initial subscription, and with lower ongoing
operating costs for everyone.
Finally, I would like to take this opportunity to thank shareholders,
many of whom we were able to welcome to our AGM in July, for their
continued support.
Richard Roth
Chairman
23 October 2018
Investment Portfolio as at 31 August 2018
Change
in value
Carrying for the
Net Cost value 6 month % Equity
of investment at 31/08/18 period % Equity held % Net
Company Description GBP'000 GBP'000 GBP'000 held OT2 All OTVCTs Assets
------------ --------------------- -------------- ------------ ----------- --------- ----------- -------
Select Photocopier
Technology interfaces 132 388 32 7.4 58.6 23.9
Arecor Protein stabilisation 289 295 27 2.6 12.1 18.2
ImmBio Novel vaccines 267 200 24 2.6 20.9 12.3
Scancell
(bid price Antibody based
11.5p) cancer therapeutics 150 144 144 0.3 3.3 8.9
Bone graft
Orthogem material 342 100 - 5.3 19.9 6.2
Active wound
Insense healing dressings 204 52 - 2.0 6.8 3.2
Rechargeable
Oxis Energy batteries 540 42 (98) 0.2 0.4 2.6
Plasma Solid state
Antennas antennas 188 38 5.6 48.8 2.3
Inaplex Data Integration 138 19 - 21.5 34.8 1.1
------------ --------------------- -------------- ------------ ---- --------- ----------- -------
Total Investments 2,251 1,278 129 78.7
Other Net
Assets 345 21.3
----------------------------------- -------------- ------------ ----------- --------- ----------- -------
Net Assets 1,623 100
----------------------------------- -------------- ------------ ----------- --------- ----------- -------
Responsibility Statement of the Directors in respect of the half-yearly
report
We confirm that to the best of our knowledge:
-- the half-yearly financial statements have been prepared in accordance
with the statement "Interim Financial Reporting" issued by the Financial
Reporting Council;
-- the half-yearly report includes a fair review of the information required
by the Financial Services Authority Disclosure and Transparency Rules,
being:
-- an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements.
-- a description of the principal risks and uncertainties for the remaining
six months of the year.
-- a description of related party transactions that have taken place in the
first six months of the current financial year that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the
last annual report that could do so.
On behalf of the Board:
Richard Roth
Chairman
23 October 2018
Income Statement
Six months to 31 Aug 2018 Six months to 31 Aug 2017 Year to 28 Feb 2018
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Gain on disposal of fixed asset investments - - - - 33 33 - 86 86
Unrealised (losses)/gains on valuation of fixed asset
investments - (33) (33) - 115 115 - 49 49
Investment management fees (2) (6) (8) (3) (9) (12) (6) (19) (25)
Other expenses (27) - (27) (24) - (24) (50) - (50)
Return on ordinary activities before tax (29) (39) (68) (27) 139 112 (56) 116 60
Taxation on ordinary activities - - - - - - - - -
Return on ordinary activities after tax (29) (39) (68) (27) 139 112 (56) 116 60
------------------------------------------------------ --------- --- --------- --- --------- --- --------- --- --------- ---- ---------- --- ----------- ---------- --- ---------- ---
Earnings per share -- basic and diluted (0.6)p (0.7)p (1.3)p (0.4)p 2.1p 1.7p (0.9)p 1.9p 1.0p
------------------------------------------------------ --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
-- The 'Total' column of this statement is the profit and loss account of
the Company; the supplementary Revenue return and Capital return columns
have been prepared under guidance published by the Association of
Investment Companies.
-- All revenue and capital items in the above statement derive from
continuing operations.
-- The accompanying notes are an integral part of the half-yearly report.
-- The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
The Company has no recognised gains or losses other than the results for
the period as set out above. Accordingly, a Statement of Comprehensive
Income is not required.
Balance Sheet
As at 31 Aug As at 31 Aug As at 28 Feb
2018 2017 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------- ------- ------------
Fixed asset investments
(At fair value through
profit and loss) 1,278 1,014 1,149
Current assets:
Debtors 184 227 166
Creditors: Amounts
falling due within
one year (19) (18) (10)
Cash at Bank 180 1,417 386
--------------------------- ------- ------- ------------
Net current assets 345 1,626 542
--------------------------- ----
Net assets 1,623 2,640 1,691
--------------------------- ----
Called up equity share
capital 533 679 533
Capital redemption
reserve 146 - 146
Share premium 376 376 376
Unrealised capital
reserve (973) (874) (940)
Profit and Loss account
reserve 1,541 2,459 1,576
Total equity shareholders'
funds 1,623 2,640 1,691
Net asset value per 30.4p 38.9p 31.7p
share
--------------------------- --------- ------- ------- ------- --------- ------------
Statement of Changes in Equity
Capital Unrealised Profit
Share Redemption Share Capital & Loss
Capital Reserve Premium Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ----------- -------- ------------ ---------- ----------
As at 1 March 2017 679 - 376 235 1,238 2,528
Revenue return on ordinary
activities after tax - - - - (27) (27)
Expenses charged to
capital - - - - (9) (9)
Current period gains
on fair value of investments - - - 115 - 115
Current period gains
on disposal - - - - 33 33
Prior year gains now
realised - - - (1,224) 1,224 -
------------------------------
Balance as at 31 August
2017 679 - 376 (874) 2,459 2,640
------------------------------
As at 1 March 2017 679 - 376 235 1,238 2,528
Revenue return on ordinary
activities after tax - - - - (56) (56)
Expenses charged to
capital - - - - (19) (19)
Current period gains
on disposal - - - - 86 86
Current period gains
on fair value of investments - - - 49 - 49
Purchase of own shares (146) 146 - - (470) (470)
Prior year gains now
realised - - - (1,224) 1,224 -
Dividends paid - - - - (427) (427)
------------------------------
Balance as at 28 February
2018 533 146 376 (940) 1,576 1,691
------------------------------
As at 1 March 2018 533 146 376 (940) 1,576 1,691
Revenue return on ordinary
activities after tax - - - - (29) (29)
Expenses charged to
capital - - - - (6) (6)
Current period losses
on fair value of investments - - - (33) - (33)
------------------------------
Balance as at 31 August
2018 533 146 376 (973) 1,541 1,623
------------------------------
Statement of Cash Flows
Six months Six months
to 31 Aug to 31 Aug Year to 28
2018 2017 Feb 2018
GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ---------- ------------
Cash flows from operating
activities
Return on ordinary activities
before tax (68) 112 60
Adjustments for:
Increase in debtors (18) (225) (164)
Increase/(decrease) in
creditors 9 (7) (15)
Gain on disposal of fixed asset
investments - (33) (86)
Losses/(Gains) on valuation of
fixed asset investments 33 (115) (49)
Movement in investment debtors
and creditors - 213 164
-------------------------------------
Outflow from operating
activities (44) (55) (90)
-------------------------------------
Cash flows from investing activities
Purchase of fixed asset investments (162) (30) (230)
Sale of fixed asset investments - 1,356 1,457
-------------------------------------
Total cash flows from investing
activities (162) 1,326 1,227
-------------------------------------
Cash flows from financing activities
Tender Offer - - (470)
Dividends paid - - (427)
Total cash flows from financing
activities - - (897)
------------------------------------- -------- --------- ---------
(Decrease)/increase in cash and cash
equivalents (206) 1,271 240
-------------------------------------
Opening cash and cash equivalents 386 146 146
Closing cash and cash equivalents 180 1,417 386
------------------------------------- -------- --------- ---------
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
August 2018 have been prepared in accordance with the Financial
Reporting Council's (FRC) Financial Reporting Standard 104 Interim
Financial Reporting ('FRS 104') and the Statement of Recommended
Practice (SORP) for Investment Companies re-issued by the Association of
Investment Companies in November 2014. Details of the accounting
policies and valuation methodologies are included in the Annual Report.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 August
2018 do not constitute statutory accounts within the meaning of Section
415 of the Companies Act 2006. The comparative figures for the year
ended 28 February 2018 have been extracted from the audited financial
statements for that year, which have been delivered to the Registrar of
Companies. The independent auditor's report on those financial
statements, in accordance with chapter 3, part 16 of the Companies Act
2006, was unqualified. This half-yearly report has not been reviewed by
the Company's auditor.
3. Earnings per share
The calculation of earnings per share for the period is based on the
return attributable to shareholders divided by the weighted average
number of shares in issue during the period. There are no potentially
dilutive capital instruments in issue and, therefore, no diluted returns
per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on the net assets at the period
end divided by the number of shares in issue at that date (2018:
5,331,889; 2017: 6,792,923).
5. Principal risks and uncertainties
The Company's assets consist of equity and fixed interest investments,
cash and liquid resources. Its principal risks are therefore market risk,
credit risk and liquidity risk. Other risks faced by the Company include
economic, loss of approval as a Venture Capital Trust, investment and
strategic, regulatory, reputational, operational and financial risks.
These risks, and the way in which they are managed, are described in
more detail in the Company's Annual Report and Accounts for the year
ended 28 February 2018. The Company's principal risks and uncertainties
have not changed materially since the date of that report.
6. Related party transactions
OT2 Managers Ltd, a wholly owned subsidiary, provides investment
management services to the Company for a fee of 1% of net assets per
annum.
7. Events after the Balance Sheet Date
In September 2018, OT2 invested GBP59,000 in Orthogem Limited.
As alluded to in the Chairman's statement, on 22 October 2018, the
Company published a Circular to Shareholders, regarding a proposal to
increase its capital base, and the related appointment of a new
investment manager.
8. Copies of this statement are available from Oxford Technology
Management, The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA and
on the Company's website -- www.oxfordtechnology.com/vct2.
Board Directors: Richard Roth, Alex Starling, Robin Goodfellow, and
David Livesley
Investment Manager: OT2 Managers Ltd with services contracted to Oxford
Technology Management Ltd
Website: www.oxfordtechnology.com/vct2
(END) Dow Jones Newswires
October 24, 2018 02:00 ET (06:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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